Bush Sets Sights On Killing Medicare

If there’s anything that is known to worry President Bush and his chief political adviser, Karl Rove, it’s the possibility that they’ll be deprived of a second term for the same reason that the first Bush Presidency failed: a focus on foreign military adventures at the expense of domestic problems. With his approval ratings in sharp decline and his war plans for Iraq arousing public doubt, Mr. Bush is arguably in worse shape than his father was at this stage in his Presidency.

As this is written, several hours before he delivers the State of the Union address, Mr. Bush appears to be imitating neither his father nor his supposed model, Ronald Reagan, but his despised predecessor, Bill Clinton-with a wish list of new domestic initiatives appealing to moderate voters.

Having misplaced my invitation to the White House preview staged for select industry lobbyists and conservative political activists, I am unable to confirm the press leaks about those initiatives. But what appears to be his most ambitious plan-aside from invading Iraq-is also one of the Republican Party’s oldest schemes. That would be the effective dismantling of Medicare.

Aware of the great success and popularity of the federal health-care program for the elderly since its creation in 1965, conservatives no longer denigrate it with inflammatory rhetoric about “socialized medicine.” They no longer boast about their attempts to defeat it, as Bob Dole used to, and they avoid even a whisper of Newt Gingrich’s ambition to let the program “wither.” Instead, as proper “compassionate conservatives,” they speak of “choice” and “reform,” and claim to be Medicare’s most ardent defenders. They even talk about providing prescription-drug coverage to ease the financial burden of survival on old people with fixed incomes.

But when Mr. Bush finally reveals the details of his plan, nobody should be surprised if it’s more beneficial to pharmaceutical companies and health-maintenance organizations than to elderly patients. The drug firms and the H.M.O.’s are reliable and generous donors to the Republican Party, after all, having given roughly $100 million to G.O.P. candidates and committees during the last two election cycles (almost exactly twice the amount those industries gave to Democrats).

The nation’s old people are not a political asset, but a major expense item-in a federal budget headed again toward record deficits-at a time when the President prefers spending on dividend tax cuts, estate tax cuts, accelerated income-tax cuts and other comforts for the very comfortable.

For conservatives, the genius of the Bush proposal is that it would effectively abolish Medicare by transforming the program into a gigantic system of subsidized H.M.O.’s and profit-making companies. In theory, that would reduce the cost of providing minimal health services to the elderly. And also in theory, that would leave enough money to pay for a minimal prescription-drug benefit.

Those theoretical savings are what Mr. Bush is really talking about when he mentions “reform” of Medicare. To date, however, the economic benefits of privatization have been more theoretical than real. The experimental “Medicare-plus” program that once enrolled about six million elderly has seen companies dropping coverage for nearly half of them-because the profit margins are simply too low.

The private health-care sector still prefers the Bush scheme, for obvious reasons. When the fine print of the regulations is written, they will find ways to reject the ill and injured while pocketing premiums from the healthy. It’s a great plan for everyone except the elderly, whose “choice” will be to enroll in an H.M.O. or other profit-oriented program-or forget about those subsidized prescription drugs.

At that point, their choices will actually become far more restricted than they were in traditional Medicare, whose enrollees are permitted to choose their own doctors and hospitals.

Privatization actually offers fewer choices to patients than the public system does. Does anyone believe, at this late date, that a corporate medical bureaucracy will provide better health care or lower costs than a public medical bureaucracy?

Drug-company executives want no part of fighting with the government over cost-containment measures, like their counterparts at private hospitals and Medicare mills. They know very well that Medicare’s enormous market power would drive down drug costs, just as similarly empowered government officials have achieved lower drug prices in Canada.

Sooner or later, rising costs will make real reform of Medicare unavoidable-and if the program is to continue to fulfill its original purposes, that reform will have to deal with the costs of prescription drugs. Payroll taxes may have to be increased by half a percent. The excess profits of the pharmaceutical sector will have to be reduced. We are going to have to pay more-and the question is whether we want to pay increased premiums for fewer and worse choices, or higher taxes for more and better ones.